The EU’s competitiveness has slumped in recent years, hit by a surge in energy costs linked to Russia’s war against Ukraine, the pull factor of incentives provided by the US, and industrial overcapacity in China. Countries, businesses and economists are increasing calling out what they see an overwhelming burden of red tape in Europe that is deterring investment at the very time that the continent needs to boost its innovation capacity  to compete with the US and China in the industries and technologies set to define the 21st century.

As Mario Draghi points out in his recent landmark report on the Future of European competitiveness, excessive regulation and administrative burden can hinder the competitiveness of EU companies compared to other blocs. It negatively affects sectoral productivity, for instance by increasing companies’ operation costs and raises barriers to entry form new companies, deterring competition. As the Draghi report underlines, since 2019, the EU has passed 13,000 pieces of legislation compared to some 3000 in the US. The report specifically highlights the sustainability reporting and due diligence framework as ‘a major source of regulatory burden’ in the EU.

Rolling back unnecessary regulatory burdens - and therefore making it easier to do business in Europe - is a major part of the EU’s plan to strengthen the economy and competitiveness, and the EU has already started changing course.  The EU President Ursula von der Leyen, in her mission letters to new Commissioners, has tasked her appointees with subjecting the entire acquis of EU laws, existing and proposed, to a regulatory burden test. Also in her sights is an ‘omnibus’ regulation that aims to tackle ‘in one step’ critical parts of the EU’s reporting requirements framework including the new CSDDD, CSDR and the EU taxonomy with the aim of streamlining and simplifying, or potentially re-opening reporting rules for negotiation.

As the pivotal end of the first 100 days of the new EU Commission’s term nears, the Financial Times, in partnership with Exxon, will convene EU policymakers, business leaders and other stakeholders in Brussels to discuss the EU’s regulatory simplification plan, its progress, its challenges, and its impact on Europe’s competitiveness. 

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